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Issues: Scope for levy of penalty under s. 10(A) of the CST Act.
In this judgment by the Appellate Tribunal ITAT MADRAS, the issue at hand was the levy of a penalty under section 10(A) of the CST Act. The assessing authority imposed a penalty on the appellant for purchasing goods that were deemed to be outside the scope of the articles mentioned in the Registration Certificate under the CST Act. The AAC, while acknowledging that the goods were within the scope of the articles mentioned, considered them to be capital goods and thus not eligible for purchase under the 'C' Forms associated with the Registration Certificates. The Tribunal heard arguments from both parties and reviewed the records presented. The Tribunal found that the goods in question were indeed mentioned in the Registration Certificate issued to the appellant under the CST Act, making the issuance of 'C' Forms for the purchases valid. The appellant argued that the goods purchased were utilized in the manufacturing process of goods sold by them, citing a Supreme Court decision. The Tribunal referenced Section 8(3)(b) and Rule 13 of the Act, which specify that goods like machinery, equipment, tools, and accessories used in the manufacturing process qualify for special treatment under the Act. A Notification issued by the Central Government further supported this interpretation, indicating that such items are considered part of the manufacturing process. Based on the provisions of the Act and Rules, the Tribunal concluded that the goods purchased by the appellant fell within the scope of the articles mentioned in the Registration Certificate and were indeed used in the manufacturing process. Therefore, the Tribunal disagreed with the view of the appellate authority that considered the goods as capital in nature, as it was not relevant in light of the specific provisions of the Act and Rules. Consequently, the Tribunal set aside the penalty of Rs. 1,285 imposed on the appellant, ruling in favor of the appellant.
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